On appeal from Superior Court of New Jersey, Law Division, Essex County.
Approved for Publication March 3, 1995.
Before Judges Brody, Long and Levy. The opinion of the court was delivered by Brody, P.j.a.d.
The opinion of the court was delivered by: Brody
Presented with cross-motions for summary judgment, the trial Judge denied plaintiff's motion and granted the motions of all defendants. Plaintiff is a real estate broker. It appeals from a portion of the resulting final judgment that defeats its claim against defendants Albert and John Frassetto Development Company and Albert Frassetto (hereafter "defendants") for a lease commission. *fn1 Plaintiff claims that the commission is due under a 1979 agreement with defendants for brokering a lease of part of their commercial building to Madison Business Forms, Inc.
The underlying issue is whether the agreement requires defendants to pay a commission for a new lease entered into with the same tenant after the 10-year term of the original lease had expired. *fn2 The trial Judge concluded that major terms of the new lease are so different from those of the original lease that plaintiff is not entitled to a commission. We reverse because despite the differences between the two leases, the agreement requires defendants to pay the commission.
The relevant portion of the agreement provides:
It is understood and agreed that in the event the tenant, its associates, affiliates, successors or assigns, renews, including month to month tenancies, and/or extends lease, or takes additional space, . . . or purchases, then in that event [defendants] will pay to [plaintiff] a commission of 5% of the gross aggregate rental or gross sales price; and this commission agreement shall be in full force and binding on [defendants], [their] grantees, heirs, successors and assigns to [their] interest in the subject property.
In his letter opinion the trial Judge held:
Since the subsequent lease was clearly a new lease and not an extension or a renewal of the old lease, the plaintiff is not entitled to a commission on the new lease.
The Judge found as follows respecting the differences between the leases:
A comparison of the two leases shows that the tenant did not renew or extend its lease but rather entered into a new lease at or near the expiration of the old lease. There are many substantial and significant differences between the two leases. The rented space was enlarged from 8,144 square feet to 11,870 square feet. Significant construction and tenant fit ups were to take place at a total cost of $175,000 with the tenant contributing $75,000. The rent was increased from $4.72/sq. ft. to $6.90/sq. ft. The new lease did not contain, as did the old lease, an option for the tenant to renew. *fn3
The fact that under the new lease the rented space is enlarged is not a reason to deny plaintiff a commission. The commission agreement expressly provides that a commission is due if under a new lease "the tenant . . . takes additional space." The parties undoubtedly foresaw that if additional space is leased, the rent would be increased. It was thus foreseen that an increase in rent would not be a reason to deny plaintiff a commission. The fact that under the new lease the landlord and tenant are obliged to make improvements to integrate the additional space with the original space was also undoubtedly foreseen. Besides, the landlord certainly took into account the cost of the improvements in arriving at the increased rent.
The trial Judge erroneously focused solely on whether the new lease is an extension or renewal of the original lease, without considering that under the agreement a commission is also expressly due if additional space is leased under a new lease. That provision implies that a ...